According to ICIS, escalating conflicts in the Middle East, coupled with restrictions on passage through the Strait of Hormuz, are severely disrupting the global trade in chemicals, plastics, and energy. A significant portion of Middle Eastern petrochemical exports pass through this waterway, and continued restrictions are causing reduced global supply, increased raw material costs, and across-the-board price increases.
Joe, ICIS's Global Chemicals Editor, points out that while the US can adjust some exports to alleviate shortages in certain regions, it cannot completely replace the supply gap in the Middle East. More alarmingly, persistently high oil and gas prices may suppress market demand and drag down economic growth, an impact particularly pronounced in Europe and Asia. ICIS predicts that Brent crude oil prices will climb to $90 per barrel by March 2026, and even with a de-escalation of geopolitical tensions, risk premiums may persist.
The key impacts of this event are particularly prominent:
84% of the Middle East's polyethylene production capacity relies on exports through the Strait of Hormuz; this waterway is a veritable trade lifeline.
In 2025, the region exported over 12.5 million tons of polyethylene, 14 million tons of methanol, and 6.5 million tons of ethylene glycol, mostly destined for China, the rest of Asia, and the European Union.
Asia's high dependence on Middle Eastern raw materials, with most seaborne naphtha originating from the Middle East, poses a significant feedstock supply risk to local cracking units.
European producers, influenced by expectations of tightening supply, have shifted from moderate contract negotiations to triple-digit price increases.
Although the United States exports nearly half of its polyethylene production, it can increase its polyethylene and ethylene glycol shipments to Europe and Asia to compensate for the supply gap. Even so, the global market will remain tight, price volatility will intensify, and profit pressure on downstream companies will continue to increase.
